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Mondi declares €0.21 dividend on strong H1 performance

LSE- and JSE-listed packaging and paper group Mondi has delivered a strong performance in the first half of this year, and declared an interim dividend of €0.21 a share.

Mondi’s underlying earnings before interest, taxes, depreciation and amortisation are €852-million, which was up 17% year-on-year, with a margin of 22.9%.

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Mondi Group CEO PeterOswald commented in a statement that the company had benefited from good demand across its packaging business, as well as higher average selling prices, while remaining focused on initiatives to drive performance and mitigate inflationary pressure on its cost base.

“We saw a strong operational performance across the pulp and paper business, with the exception of the extended shut at our Richards Bay mill,” he pointed out.

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Mondi’s capital expenditure programme of more than €750-million is expected to contribute to earnings from 2019.

The modernisation of Mondi’s kraft paper facility in Steti, in Czech Republic, is on track to start up later this year and work to upgrade the pulp mill at Mondi’s Ruzomberok mill, in Slovakia, has started.

Meanwhile, Mondi awaits final permits to proceed with its investment in a new 300 000 t kraft top white machine.

Revenue was up 4% on a like-for-like basis, supported by higher average selling prices across all Mondi’s businesses and volume growth in containerboard and industrial bags.

Input costs were higher than the comparable prior year period with the notable

exception of paper for recycling costs, with average European benchmark prices down 27% and 30% on the comparable prior year period and the second half of 2017, respectively.

are seeing signs of stabilisation in European paper for recycling markets, with benchmark prices holding steady during the second quarter and July,” said Oswald.

Wood costs were generally higher in local currency terms in northern and central Europe during the first half of the year. Energy costs were higher than the comparable prior year period, driven by increasing commodity input prices.

Cash fixed costs were higher as a result of inflationary cost pressures across the group and the impact of mill maintenance shuts.

Depreciation and amortisation charges were marginally lower during the period, reported Mondi.

“The trading environment remains positive going into the second half of the year, with pricing in key fibre-based product segments remaining supportive. The second half of the year will be impacted by the usual seasonal downturn in uncoated fine paper.

“We also expect continued pressure on the cost base across the group, mitigated by our ongoing proactive and comprehensive cost reduction programmes,” concluded Oswald.

Mondi’s share price on the JSE went up 6.17% to R38.25 apiece, compared with Thursday’s closing price of R36.03 apiece.